Is Another Brand of Judicial Deference on the Chopping Block?

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This teleforum will focus on the sundry problems with so-called "Brand X deference," whose name derives from the 2005 Supreme Court decision in National Cable & Telecom. Assoc. v. Brand X Internet Services.  The judicial deference holding in the case was that federal agencies may issue new regulations that supersede previous interpretations of the relevant statute made by federal courts of appeals (unless that prior federal-court interpretation purported to be the only permissible interpretation of the statute).  Hence, even if a federal circuit court of appeals has previously interpreted a statute, if an agency with jurisdiction subsequently issues a new regulation interpreting that statute differently, the federal court in a future case must defer (i.e., give Chevron deference) to the agency’s new interpretation of the statute.  

This month the U.S. Supreme Court will consider whether or not to take up a case that could do for Brand X deference what Kisor v. Wilkie did for Auer deference.  That is, the Court could radically reduce the scope of Brand X’s application and/or clarify that Brand X deference only applies when a prior federal court did not use traditional tools of statutory analysis in interpreting the statutory provision at issue.  Or, the Court could go even further and do away with Brand X deference altogether, as then-Judge Gorsuch called for when he was serving on the Tenth Circuit.

Join us for this timely discussion of Baldwin v. U.S. (cert pending).


Mark Chenoweth, Executive Director & General Counsel, New Civil Liberties Alliance 

Moderator: Robert T. Carney, Senior Counsel, Caplin & Drysdale


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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Administrative Law and Regulation Practice Group, was recorded on Wednesday, January 8, 2020 during a live teleforum conference call held exclusively for Federalist Society members.     


Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call.  This afternoon's topic is titled “Is Another Brand of Judicial Deference on the Chopping Block?”  My name is Wesley Hodges, and I'm the Associate Director of Practice Groups at The Federalist Society. 


      As always, please note that all expressions of opinion are those of the experts on today's call. 


      Today, we are very fortunate to have with us moderating Mr. Robert T. Carney who is Senior Counsel at Caplin & Drysdale, is an Adjunct Professor of Tax Practice and Procedure at the Georgetown Law School.  And with us today, speaking, is Mr. Mark Chenoweth who is the Executive Director and General Counsel at the New Civil Liberties Alliance, who has a case pending -- cert petition for the Supreme Court representing the Baldwins. 


      After our speaker gives his remarks, we will have time for your questions.  So please keep in mind what you have for the case, or for this topic, generally.  Thank you very much for sharing with us today.  Bob, the floor is yours.


Robert T. Carney:  Well, thank you, Wesley.  The cert petition involves a case called Baldwin v. United States.  Without, obviously, going into great detail, the Baldwins filed a claim for refund, amended tax return, back in 2011.  Sent it by regular mail and the service claims to have never received it.  The common law mailbox rule would say, since they proved, and district court found they proved they mailed it, that it was rebuttably presumed to have been received within a reasonable period of time of mailing it, which would have been timely.  There's also a statutory, as they call it, mailbox rule, Section 7502 of the Internal Revenue Code, which provides for timely mailing as timely filing, if it's in fact received.  Or, if it's sent by registered mail, then it would also have a presumption of received. 


      The government claimed that this was the exclusive means of showing actual receipt because they had promulgated a regulation two months after the filing of the claim in question, back in August of 2011 that says that 7502 of the Internal Revenue Code is exclusive.  Interestingly, the Ninth Circuit, where the case was appealed to, had its own precedent, which said that the common law mailbox rule survived the statute's passage; it was not superseded. So in effect, you could use either one and the statute was effectively a safe harbor.


      The Court of Appeals basically did not follow its own precedent, in a case called Anderson and said that since the regulation had since been promulgated, under Brand X the IRS Treasury could effectively repeal Anderson and supersede the -- use the regulation to overrule it and to say that the rule is now, that the statutory 7502 is exclusive rule.  And since it wasn't received, in fact, they were deemed not to have filed their claim.  That is the framework on which the case is proceeding, hopefully, to the Supreme Court that Mark is representing the taxpayers on in the cert petition.  So Mark?


Mark Chenoweth:  Yeah, thanks very much, Bob.  And let me just dive right in and say that, what I'm going to focus on are the problems with Brand X because that is the 2005 Supreme Court decision that allowed the Ninth Circuit to ignore its own precedent and then overturn the federal district court ruling in favor of the Baldwins.  But I don't want to focus on the particulars of the Baldwin case, except a little bit later, I'll explain why I think it's such a good vehicle for the U.S. Supreme Court to revisit Brand X-style judicial deference. 


      Let me dive right into the problems of Brand X under current law.  And I will begin with the arguments that NLCA's own Professor Philip Hamburger has famously made against Chevron and Auer deference because those arguments apply here, too.  However, as we will see in a moment, there are some unique arguments against Brand X deference as well.


      The Constitution requires federal judges to exercise independent judgment and to refrain from exhibiting bias when interpreting the law.  These are the most foundational constitutional requirements of an independent judiciary.  And the reason why Article III gives federal judges life tenure and salary protection is precisely to ensure that judicial pronouncements will reflect the court's independent judgment rather than the desires of the political branches.  At the same time, the Due Process Clause forbids judges to display any type of bias for or against a litigant in front of them when resolving disputes.  And, in fact, these two requirements, these statements of judicial duty, are so axiomatic that they are seldom, if ever, mentioned or relied upon in legal argument because to even suggest that a court would depart from its duty of independent judgment or would display bias against a litigant would really be a scandalous insinuation.  And yet, the judiciary has been flouting these foundational constitutional commands whenever it uses judicial deference to agency interpretations of federal statutes.


      So consider, first, judicial independence.  Brand X compels judges to abandon their duty of independent judgment.  Under the Constitution, the judiciary obviously is established as a separate and independent branch of the federal government.  As I mentioned, there's tenure and salary protection to shield the judges.  And yet, despite these extraordinary measures, Article III judges abandon their independence and give controlling weight to an agency's opinion of what a statute means, not because of the agency's persuasiveness, which would be fine, but rather, based solely on the brute fact that, and this administrative agency has addressed the same interpretive question that is before the court.  This abandonment of judicial responsibility is not tolerated in any other context and it never should be accepted by a truly independent judiciary.


      The Constitution's mandate of judicial independence is not something that should be cast aside, and yet, Brand X allows a non-judicial entity, in this case, the Internal Revenue Service, to usurp the judiciary's power of statutory interpretation, and then it commands judges to defer to the legal pronouncements of this supposed expert body that's external to the judiciary. 


      In other words, Brand X is a command that courts abandon their duty of independent judgment and assign controlling weight to a non-judicial entity's interpretation of a statute.  It's an add that recognizing an argument's persuasive weight does not compromise a court's duty of independent judgment, so if the Ninth Circuit had just thought the IRS's interpretation of the statute was better than the Ninth Circuit's previous interpretation of the statute, it could have said that and encouraged an en banc court in the Ninth Circuit.  But that's not what happened here.


      Brand X and Chevron, for that matter, require more than just respectful consideration of an agency's views.  These cases command courts to give weight to those views.  It instructs them to subordinate their own judgments to the views.  In contrast, Article III's duty of independent judgment requires courts to consider an agency's views and to adopt them when persuasive, but it absolutely forbids a regime in which courts defer or give controlling weight to non-judicial entity interpretations of statutory language, particularly when that interpretation would not accord with the court's own sense of the best interpretation of the statute.


      A related, and more serious problem, with Brand X is that it requires the judiciary to display systemic bias in favor of agencies whenever they appear as litigants.  It's bad enough that a court would abandon its independent judgment and defer to a non-judicial entity's statutory interpretation, but for a court to do so in a manner that favors an actual litigant before the court is really an abomination.  And the Supreme Court has held that even the appearance of potential bias toward a litigant violates the Due Process Clause.  That was the Caperton v. A.T. Massey Coal Co. case in 2009.  And yet, Brand X institutionalizes a regime of systematic judicial bias by requiring courts to defer to agency litigants whenever a disputed question of statutory interpretation arises.  And rather than exercise their own judgment about what the law means, the judges are actually deferring to one of the litigants before them about the law's meaning.  In this case, deferring to the IRS.


      If a judge were to openly admit that he or she accepts a government litigant's interpretation of a statute whenever it is reasonable, and that he or she automatically rejects any competing interpretations by other litigants, that judge would ordinarily be impeached and removed from the bench for exhibiting bias and abusing power.


      For example, if you imagine a judge who said that they always accept the prosecutor's view of the law, that's just not consistent with providing due process.  Yet, that is essentially what judges do when they apply these deference cases where the agency appears as a litigant.  The government litigant wins, simply by showing that its preferred interpretation of the statute is reasonable, even if it's wrong, as long as it's reasonable, while the opposing litigant, the Baldwins in this case, get no such latitude from the court. And, in fact, they have to show that not only is the government's view wrong, that it's unreasonably wrong.


      This also compromises the judicial oath.  Judges take an oath to administer justice without respect to persons, to faithfully and impartially discharge and perform all the duties incumbent upon them.  And judges are ordinarily very careful to live up to these commitments.  Nonetheless, under Brand X, otherwise scrupulous judges who are sworn to administer justice without respect to persons are forced to remove the judicial blindfold and tilt the scales in favor of the government. 


      As the Wisconsin Supreme Court noted in rejecting Chevron deference in that state, "systematic favor deprives the non-governmental party of an independent and impartial tribunal."  So far, what I've said might apply equally well to Chevron and/or Auer, Kisor deference.  But this next point is more specific to Brand X deference.


      One of the reasons that Justice Kagan supplied for upholding a version of Auer deference in her Kisor opinion was stare decisis: leaving settled cases settled.  So it is important to point out in the Brand X context, I think, that Brand X is an absolute disaster for stare decisis because it actually empowers federal agencies to overturn federal judicial court decisions, even ones that are decades old, as in this case.  If Justice Kagan is serious about her commitment to stare decisis and the values that stare decisis serve, then on balance, I think she, and other justices, who care about stare decisis should favor jettisoning Brand X deference.  It supplies a mechanism to federal agencies for subverting stare decisis. 


      As an aside, let me point out that stare decisis is not a reason not to revisit Brand X, itself, because the constitutional arguments against it were not presented and considered in that case.  And although Justice Scalia flagged the Brand X decision in his dissent as probably unconstitutional, none of the parties presented the constitutional arguments that the Baldwins have raised, nor did the Brand X majority discuss these constitutional concerns.  So stare decisis can't excuse the Court from failing to consider the constitutionality, or reconsider the constitutionality of Brand X deference,


      Now, when I say that Brand X circumvents stare decisis, one of the things that it does is undercut the settled expectations of the parties.  And I think that the Baldwins' case really illustrates the fair notice problem especially well.  That's one of the reasons why it think this is an excellent vehicle for reconsidering Brand X.  In light of longstanding common law, a decades old statute, and the, then, 20-year-old Anderson decision, the Baldwins had every reason to expect that they would be able to rely on extrinsic evidence, should it become necessary, to prove that they mailed their tax return on time.


      Instead, thanks to Brand X, the Ninth Circuit allowed the IRS, in one swoop, to erase the common law, the statute, the court precedent, all simply by passing a new regulation, and passing the regulation after the Baldwins had already filed their tax return.  Such unfairness is diametrically opposite to stare decisis values, like fair notice and reasonable reliance.  And it makes Brand X unworkable.  It provides no assurance to ordinary citizens that following the rule of law and conforming one's conduct to the law, as it exists at the time that they act, will lead to predictable consequences.  Instead, litigants like the Baldwins are doomed if they comply with court precedent, common law, and the like. 


      So the Baldwins had no way of knowing, at the time they made their decision to mail their refund claim by regular U.S. mail, that they needed to predict whether the IRS might change its interpretation of the law and pass a new regulation, and tasking the Baldwins to be omniscient is antithetical to any workable rule of law. 


      With specific reference to the common law mailbox rule, which Bob was mentioning at the top of our teleforum, consider that federal courts will generally not interpret statutes passed by Congress to supplant the common law, absent a clear statement to that effect.  But when a federal agency is allowed to use Brand X to effect the same result, there's no clear statement of an intent to supplant the common law needed.  To the contrary, in fact, it's the very ambiguity that supposedly exists in the statute that gives rise to Brand X's application that permits the agency to override the common law.  And so another problem with Brand X is that it's giving more power to a federal agency than to Congress in this regard. 


      Under ordinary constitutional principles, a split in the court of appeals regarding the meaning of a statutory provision, whether it's Section 7502, which was at issue here, in the Internal Revenue Code, or if it were something else, ordinarily that split would be decided by the Supreme Court and the Executive Branch would not be able to circumvent the judicial system by resolving the split on its own.  And even though the IRS may feel strongly that the split needs to be resolved, that desire doesn't provide the sort of special justification needed to overcome stare decisis that the Supreme Court has demanded.  And I can't help but mentioning that the IRS has slept on the split over Section 7502 for 21 years.  And so the idea that it needed to pass this regulation just at the time it did in 2011 is a little bit suspect.  But that's neither here nor there when it comes to the particular defects with Brand X.  But suffice it to say that Brand X  has become a game changer in favor of government litigants.


      The next point that I wanted to make about Brand X: that it turns federal court of appeals decisions into mere advisory opinions of a sort.  And the Solicitor General's brief in opposition in the Baldwin case actually concedes this point.  It observes that federal court opinions are "not authoritative" under the Brand X regime.  But this observation, again, I would submit, underscores the importance of getting rid of Brand X deference by essentially admitting that Brand X elevates executive interpretations above prior judicial interpretations and renders judicial precedence unauthoritative.


      Even if they’re not legally wrong, you can see how it really guts the Judiciary of its core function to say what the law is.  Any other litigant would be laughed out of court for presuming to say that they're free to ignore federal court decisions they don't like.  Yet, that's exactly what federal agencies get to do under Brand X.  When a federal agency relies on that case to ignore a federal court decision, Brand X requires the courts to abandon their duty to say what the law is and requires them to even repudiate what they, earlier -- what the Ninth Circuit earlier said the law is, and thereby subject the authority of the Judiciary and the authority of judicial precedent to the mere say-so of a federal agency.


      So this, again, is a way that Brand X is distinctively unconstitutional and different from Chevron or Auer deference.  Because it subject the courts and their judicial power, in particular, their precedents, to the executive and its interpretations.  So when the government concedes that federal court opinions are not authoritative under Brand X, this sums up exactly what the problem is with that decision. 


      And the practical consequence of keeping Brand X in place is that a vast majority of statutory interpretation decisions reached by federal courts will continue to have a merely advisory effect.  Brand X dictates, as the IRS in this case highlights that its futile for lower federal courts to employ regular tools of statutory construction to determine the meaning of the statute because the federal agency litigant can ignore the court's work, regardless.  I think this creates, both, bad incentives for courts.  Why should they bother to do careful statutory analysis if the agency's subsequent say so will be enough to overturn whatever the court decides.  And it also creates bad incentives for agencies because their permissible interpretations have controlling weight under Brand X, even if the agency did not engage in careful statutory analysis or employ traditional tools in reaching the statutory interpretation that the agency reached. 


      And I want to tip my cap, here, to the Cato Institute and FIB, who submitted an amicus in this case pointing out that the IRS did not bother to engage in a traditional tool analysis in its notices of proposed and final rulemaking for the regulation at issue here.  Their brief talks about IRS's "perfunctory five-page rulemaking."  And while Chevron and Kisor require courts to engage in a rigorous tool analysis to reach the best interpretation of statutes in regulations, as it stands now, Brand X does not.  It allows a backdoor through which agencies can subvert strong judicial interpretations while doing far less careful analysis than the courts have done.  And this is a problem, entirely of Brand X's making, and it could be solved by overturning Brand X entirely, or at least by clarifying that an agency cannot overturn a previous court decision where that court decision has employed traditional tools in interpreting a statute.  Otherwise, if Brand X is left in place, good, independent judicial analysis is going to continue to be routinely overturned by sloppy self-interested outcome-drive agency regulations, as happened in this case.


      In his dissent of Brand X, Justice Scalia said, "Article III courts do not sit to render decisions that can be reversed or ignored by Executive Branch officials."  He was right, then, but this fundamental disconnect between Brand X and the Constitution has become ever more pronounced over the last 15 years, and the Supreme Court should recognize the danger and retreat from its mistake in Brand X before things get any worse.


      Another reason Brand X is a problem, is that it interferes with the normal process of resolving circuit splits after percolation in the courts of appeals.  If every court defers to the agency's interpretation, there will not be as much judicial attention paid to what the best interpretation of a statute is.  This is especially true, if courts are going to treat statutory silence as a delegation to federal agencies to gap-fill, even when a federal court has already interpreted the statute, and thus, has left no gap to fill. 


      The IRS, in the Solicitor General's brief in opposition here, alludes to some nebulous efficiency that can be derived from appellate panels being able to overturn other appellate panels without the need for en banc review.  And when you think about it, that's what happened here.  You had a Ninth Circuit panel in Baldwin that overturned a previous Ninth Circuit panel in Anderson and yet, it was able to do that without going through the usual en banc process, merely by saying that they were deferring to the federal agency.  So it short circuits the usual way in which one panel has to go about overturning a previous appellate panel. 


      This might be efficient in some definition of that term, but this isn’t the constitutional way of fixing any old precedents that are improper.  And the Department of Justice, historically, has been more successful than any other litigant in obtaining en banc review in the courts of appeals, or review in the Supreme Court for resolving circuit splits, like the one that existed under Section 7502.  Surely, the IRS would be able to seek en banc review or seek cert review to urge a statutory interpretation that it thinks would secure national uniformity.  Or it could ask Congress to clarify the statute. 


      So gap-filling and national uniformity are certainly reasonable goals, but they can't justify the Executive's interference with the Judiciary and with its precedents, especially when there are other fully constitutional mechanisms for achieving those ends.  To me, the Brand X precedent short-circuits the court of appeals process, and this is worrisome, because those carefully considered differences of opinion, and their tendency to percolate up to the Supreme Court form a crucial element of our judicial system, which allows divergent views to be explored in a gradual way before reaching the high court for judicious resolution.  And it's very dangerous to depart from that traditional path of resolving things, and instead, accept Brand X's executive method for resolving circuit court splits.


      It's also worth noting that IRS, as a litigant in previous litigation over Section 7502, never sought and never supported—in fact opposed—certiorari in cases that created or deepened the split on the interpretation of Section 7502.  So its apparently not that interested in national uniformity, or to the extent IRS has sought national uniformity, it's been by demanding judicial acquiescence to IRS's interpretations under the authority of Brand X and evading cert in the Supreme Court.  So that's another problem, here, is that Brand X gives government agencies a means to evade final resolution of these kinds of questions in the Supreme Court by avoiding circuit splits.  The IRS elevates itself above the courts, as if it has the authority, which it does under Brand X to resolve circuit splits by issuing notice-and-comment regulations.


      Another way to think about the problem with Brand X is that it violates the separation of powers by submitting judicial decisions to executive approval, after the fact.  Hayburn's Case way back in 1792 recognized the unconstitutionality of executive revision of the decisions of the circuit courts.  Yet, in this case, an Article II agency amended it's regulation to overrule an Article III court decision, settle common law and the plain text of an Article when an act of Congress.  Talk about your separation of powers problem.  I mean, that's a grand slam version of separation of powers violations. 


      And though, Brand X submits judicial precedence, rather than judges current decisions to the Executive for review, the threat to judicial power remains.  The principle at stake, here, is really the same.  And judicial independence would be of very little value to people if judicial decisions only apply to the litigants, themselves.  Authoritative precedent is how the Judiciary elucidates the meaning of the Constitution and laws.  These interpretations are also what enable Americans to avoid conflict ahead of time, by following these interpretations.  And if we're going to preserve judicial power and the value of precedents, Brand X needs to be overruled. 


      The Supreme Court said in the Neal v. United States decision, back in 1996, "once we have determined a statutes meaning, we adhere to our ruling under the doctrine of stare decisis and we assess an agency's later interpretation of the statute against that settled law."  Brand X departed from Neal.  And the court can correct course by explicitly holding, now, what was implicit in Neal, that the separation of powers commands that there is no gap for an agency to fill, when a federal court with jurisdiction has already filled the gap by interpreting the relevant statute. 


      I also wanted to mention an additional unworkable aspect of Brand X that was pointed out by Justice Scalia in his Home Concrete concurrence in 2012.  And this is the so-called magic words problem.  Before Brand X came down in 2005, courts seldom explicitly stated whether a statute they were interpreting was silent or truly ambiguous or unambiguous.  And that missing analysis makes Brand X unworkable as applied to pre-2005 decisions. Judges just had no inkling that they must utter, and here I'm paraphrasing Justice Scalia, no inkling that they must utter the magic words, ambiguous or unambiguous, in order to, poof, expand or bridge Executive power.  And poof, enable or disable administrative contradiction of the Supreme Court.  Justice Scalia sharply criticized the workability of Brand X in that Home Concrete concurrence. 


      And before Brand X, and for that matter, even pre-Chevron, the 1984 Chevron case, no one was aware of the -- no judge was aware of the necessity or the utility of making a distinction or determination during the judicial review analysis of whether a statute was ambiguous or unambiguous or exactly how the judge would characterize what they were doing.  And so, even assuming that an ambiguous statute does delegate gap-filling authority to an agency, that hardly resolves situations where a pre-Brand X decision did not even make a determination about whether a statute was truly ambiguous or not.  And certainly, when a statute is silent, then you can't treat that as a delegation of gap-filling authority, because then every instance of congressional silence would turn into an open-ended delegation of authority to agencies without any sort of limiting principle.  So I would say that Brand X transgressed the Constitution when it concluded that statutory silence suggests that the agency has the discretion to fill the consequence statutory gap. 


      But still, here, the Baldwin court took it a step further and said that, because Anderson was silent as to whether the statute is silent on this common law mailbox rule point, the agency's permissible reading was allowed to trump core precedent under Brand X.  And that's just the problem here.  Anderson pre-dated Brand X.  Anderson's a 1992 decision, pre-dated Brand X by 13 years. And the court, there, did not use magic words like ambiguous or unambiguous or silent.  Instead, it simply ruled based on a straightforward reading of the text of Section 7502, that the post-marked date of a tax document sent by U.S. mail can be proved by presenting credible extrinsic evidence.  But the court below the Ninth Circuit concluded, based on an extremely sparse statutory construction analysis that Section 7502 is silent as to whether it supplements or supplants the common law mailbox rule.  And it just decided that, because Anderson did not expressly hold that the Ninth Circuit's interpretation of the statute was the only reasonable interpretation, that it had to defer to the IRS under Brand X and that's how we got where we are. 


      I should point out that, having expressly embraced Brand X deference in front of the Ninth Circuit, the Solicitor General, in it's brief in opposition, has backed away from that and tried to treat this case as not a Brand X case, but as a statutory interpretation case, which it's not.  It's a Brand X case.  But the IRS's current effort to distance this case from Brand X is, itself, curious.  It confirms that the Supreme Court should take this case, that certiorari is warranted.  Otherwise, agencies will continue to play a cat-and-mouse game using Brand X offensively in the courts of appeals, and then trying to evade review in the Supreme Court by pretending that Brand X was not crucial to the decision below. 


      So there are a couple other points here, Bob, but let me wrap up with a quick word about why the Baldwin v. United States case is a particularly good vehicle to revisit Brand X. 


      The Baldwin's case presents a strong vehicle because the district court developed a full evidentiary record here.  If the district court had felt obliged to defer to the IRS under Brand X, as the Ninth Circuit did, and as far too many federal district courts do, the IRS would have unilaterally foreclosed the creation of a record showing that the Baldwins, in fact, mailed their refund claim.  But because the district court did not defer here, and conducted a bench trial, and entered facts on the record, took testimony, gave credence to that testimony, etc., all of that gives the Supreme Court, in this case, the benefit of a fully fleshed out evidentiary record.  And that makes this a somewhat unique case, challenging Brand X, rather than having to rely on the parties speculations as to what the outcome might have been, absent Brand X.  The justices can see for themselves, very clearly, that Brand X was outcome determinative here, and that this case is presenting a problem and creating tremendous injustice against people like Howard and Karen Baldwin. 


      So with that, Bob, let me turn it back over to you.


Robert T. Carney:  Yeah, and I think one point that you made, that may merit further discussion, was some of the interesting -- the interesting way in which the Supreme Court, in Home Concrete applied Brand X and in Home Concrete, they had a prior Supreme Court decision, Colony, that had interpreted a provision of the Internal Revenue Code six-year statute of limitations.  And the treasury took it upon themselves to pass a regulation and tried to apply it -- a temporary regulation even, which doesn't have notice of hearing, and tried to apply it to Home Concrete, while the case was pending in the court of appeals. 


      Now, obviously, the Fourth Circuit didn't like that very much, and neither did the Supreme Court.  Interestingly, though, Colony, the precedent had some language in it, obviously way pre-Brand X, going way back many decades.  And in that case, they suggested the statute was ambiguous and they put their interpretation on it.  So at least when the Supreme Court apparently makes an interpretation, you're entitled -- the government's going to have a very hard time overruling it with Brand X. 


      But the real question, then, becomes, why should that be different if a circuit court, whether they use the ambiguous line -- whether the issue confined was a finding of ambiguity, that they had then corrected, so it's not ambiguous then, why can't a circuit court, and why shouldn't a circuit court, the Judicial branch of government be deemed to have filled the gap?  And I think Mark made that point.  So if you look at Home Concrete and the way the Supreme Court applied it, with respect to one of its precedents, I think the precedent of Anderson should have been treated the same way.  At least, that was my thought.  I don't know if others may have thoughts on that.


Mark Chenoweth:  I think that's a great point, Bob, and I think that if you take Neal from 1996 and you combine it with Home Concrete from, was that 2012, Bob?


Robert T. Carney:  Yes.


Mark Chenoweth:  Then you see that Brand X is the outlier.  That, I think Neal and Home Concrete are of a piece and that there's a fairly good linkage between those two and the logic there, but the Brand X is the case that sticks out like a sore thumb, that does something different.  And I don't think it'll do much violence to the Supreme Court's precedent and statutory interpretation precedent, as a whole, to simply get rid of Brand X, and leave these other cases in place to govern things, going forward.


Robert T. Carney:  I think you made a good point.  That Chevron, itself, has certain problems along these lines, as at least three justices -- current justices on the Supreme Court have also noted.  But the case, Baldwin, I think is much easier, and it could be resolved, even with Chevron not being overturned.  Because, again, the statute isn't really ambiguous in the Ninth Circuit.  And one can argue, indeed, the non-application, or the silence of the statute dealing with the common law mailbox rule doesn't even really fit the Chevron line of analysis.  But, even if it did, the fact that Ninth Circuit precedent, to which the district court case was appealed, is really fills whatever gaps had to be filled on that point, even if you assume it's the same thing.  And, so therefore, Brand X would not serve as a basis for the Baldwins to lose, even if the Chevron doctrine and the Chevron test remained in place.


Wesley Hodges:  Looks like we have two questions right out of the gate.  Here's our first caller.


Caller 1:  I've noticed that the Solicitor General has argued to the Supreme Court that since the petitioners don't argue that Chevron should be overruled, and since Brand X follows in Chevron, according to Brand X, that this is not a good case for cert.  That struck me as a strong argument, so I'd like your comments on that.  But also your comments on another point. 


      It seems to me that if you ask the Supreme Court to overrule Brand X, then that deference under Chevron turns on a fortuity.  On the fortuity as to whether or not that particular circuit has opined on the statute, yet.  If it has, then Brand X does not apply, according to your argument.  If it has not, then Chevron would apply, according to your argument.  And that would mean that even if an agency adopts a valid regulation that would deserve deference under Mead and Chevron, it would be an outlier.  And those circuits, that just happened by fortuity to have spoken first.  And it struck me that this is a mechanical problem with your arguments, and with the fact that you didn't ask that Chevron be overruled.


Mark Chenoweth:  Two thoughts on that.  First, I think that Chevron was not the basis for the decision below.  Brand X is somewhat unique among government/litigant bias doctrines.  And while Chevron and Kisor are triggered where a court construes a statute or regulation issued sometime in the past, Brand X really deals with the order of events reversed.  So Brand X requires, not merely judicial deference to agency interpretation, but also, judicial acquiescence and agency non-deference to judicial interpretation.  And it sets a direct assault on judicial authority if agency action abrogates an earlier-in-time court decision, Brand X switches on Chevron deference in favor of the government litigant.  And so Brand X is really a bizarre beast in this way.  And so I think it can be overruled without necessarily affecting the applicability or validity of Chevron or Kisor.  I think the Supreme Court has shown a tendency to do these things in steps and in multiple bites of the apple.  And so I actually think it's a virtue, and not a defect in this case that it tees up Brand X by itself so well, as opposed to requiring the Court to abandon both of them at the same time. 


      And Bob, I don't know if maybe you want to jump in on the fortuity point.  You were saying something to me, earlier this week, about how the tax court handles these things.  I had one other thing to say, but I think it would make more sense to say it, if you want to mention your tax court point.


Robert T. Carney:  A couple things.  First of all, just focus on tax in particular, but of course, since this is a tax case, as it turns out, there's never been a problem with splits of the circuits in tax areas.  The so-called Golsen rule in the Tax Court, even though the Tax Court is a court of national jurisdiction, will follow its own precedent wherever the taxpayer lives. If there is a circuit precedent in the taxpayers jurisdiction, where its overruled or not followed the tax court precedent, then the tax court, itself, will follow that circuit's opinion in ruling for a taxpayer in that -- who lives in that jurisdiction. 


      I mean, I think likewise here, there could be splits in the circuit.  And I think, as Mark pointed out, it's much easier for the government to get to the Supreme Court than it is for taxpayers, or I should say, any private litigant, if you look at percentages.  Because the Solicitor General does screen these things and the Supreme Court knows that.  So, if the Solicitor General says, I think this split is important and it should be reviewed, most of the time, they will take it.  Likewise, it's very easy for Treasury to get to -- and other government agencies, to get to Congress to get these types of clarifications. 


      So, I think that's maybe making more of an issue than really needs to be.  It's the same thing as if one circuit says, this is unambiguous and the statute is clear and therefore, Chevron doesn't apply, fine.  And if they have that precedent and they want to follow it, to me, that's no different than any other circuit split.  I don't know, Mark, if you agree with that.


Merk Chenoweth:  I do agree with that, and actually, you sort of anticipated a lot of what I was going to say, which was mostly to reiterate the point that there is a constitutional way of doing this through the percolation of circuit splits up to the Supreme Court.  And so we don't need to accept a way that violates the Due Process Clause, it violates the independence of the Judiciary, compromises judicial precedent, and so forth, in order to get there.  There is another way of dealing with circuit splits that's tried and true and consistent with the Constitution.  And I'd much rather see us do that, rather than continue in the Brand X mode of things. 


Wesley Hodges:  Very good.  We have three more questions in the queue.  Here is our next caller.


Kimberly Robinson:  Hi there.  This is Kimberly Robinson from Bloomberg Law.  You mentioned that one of the problems with Brand X is that it undercuts the settled expectations of the parties.  And I guess I'm just wondering how that's different than what happens when courts go through the normal en banc process?  And I guess, in particular, is there something about the en banc process that addresses those concerns, that's not available under Brand X?


Mark Chenoweth:  Just to make sure I understand your question.  You're saying that, if there's an en banc process, so for example in this case, if the Baldwins had gone to the Ninth Circuit and let's say that they had won, but then the government had asked for an en banc of the Ninth Circuit, and the Ninth Circuit had granted it.  And then the Ninth Circuit, as a whole, had said, hey our 1992 decision, we no longer think that's the best interpretation.  We now think that the IRS has the better interpretation, and we're not deferring to them because they're the IRS.  We're deferring to them because we actually are persuaded by their interpretation and we think they have the best interpretation.  Wouldn't the Baldwins still be in the same position of having their expectations dashed, am I understanding your question correctly?


Kimberly Robinson:  Yes, that's exactly it.


Mark Chenoweth:  Okay, terrific.  I think that there's definitely some truth to your point.  I think that the difference would be that -- a couple of differences, actually.  One, I think that it's far easier for a litigant to accept that a court, acting with judicial independence and insulated from the other litigant in the case, the IRS in this case, has reached an independent decision that that litigant doesn't like and that disadvantages that litigant.  I think that's a much easier result to accept than the idea that the other side wins just because the other side happens to be the government, which is really where we are in the Brand X world. 


      And so, I think that, even if in that sort of situation, counterfactually, the Baldwins were to lose, or any litigant were to lose, I think that they can live with that.  Might not be happy about it, but at least they'll feel like they had their day in court.  They had a fair hearing.  Whereas with Brand X, you don't.  Well, actually, in this case it's somewhat unique, because the Baldwins did have a fair hearing in front of the federal district court in trial court, they had a fair trial.  And then it was at the court of appeals level that Brand X kicked in and the Ninth Circuit decided to defer to that and take away the outcome of the fair trial that the Baldwins had had.


      The second point that I would offer is that, the kind of en banc task that you're talking about, it does happen.  And when it happens, there are certainly litigants who preferred the circuit court's previous version of the law.  But one of the things that is available to courts is that they can make decisions prospective, sometimes.  There is an ability to deal with things on a case-by-case basis, or to have equitable exceptions, or different things like that.  Whereas if it's an absolute handover and giving over to the IRS almost complete ability to say what rules are going to govern the taxpayer, then there's really, there's no recourse for someone like the Baldwins in that case.  And so not only do they not feel that they've been dealt with fairly, but that there wasn't even an opportunity for anything like a prospective rule.  Or you could imagine a court saying, we think that -- you could imagine the en banc Ninth Circuit saying, we think going forward, the rule is going to be this, but we're not going to apply it to the Baldwins here, because they had submitted their return two months before the IRS even passed this regulation and we don't think that it would be fair to them to do that.


Robert T. Carney:  I might just add one thing, Mark.  I agree with everything you said.  One point I might just add as an embellishment is that, I've litigated a lot of cases, tax cases, and en banc review is just part of the judicial process.  But that's the point. I think it is the judicial process.  So any litigant going into court knows, if you're relying on a certain precedent, that could be overturned by an en banc review, or the Supreme Court.  And that's what we're saying.  That is part of the process that you buy into when you go into the judicial process, but it is the judicial process, not the administrative agency overruling the judicial process.


Wesley Hodges:  We do have three more in the queue.  We'll just move right along to our next caller.


Eli Nachmany:  Hi Mark and Robert.  This is Eli Nachmany, I'm a 1L at Harvard Law School.  My question is, as I think a lot of us know well, Chevron deference, Auer deference, but Brand X isn't really talked about as much.  I was wondering if you can talk a little bit about, what is the extent of the problem, how often do we see Brand X deference coming into play, and does it really just concern particular regulatory areas?  I know you talked a lot about tax.  Is it mostly just a tax problem, or does it concern a lot of different regulatory areas?


Mark Chenoweth:  Sure, thanks for your question, Eli.  Happy to speak to that.  It's not limited to tax.  It's not really limited to any particular regulatory area.  It can come up any time that there's an existing federal court decision interpreting a federal statute and the federal agency doesn't like that interpretation and rather than, for example, appealing to an en banc, or appealing to the Supreme Court, or asking Congress to clarify or rewrite the law, Brand X allows the federal agency to take the expedient of just going through notice-and-comment rulemaking and passing a rule that reinterprets the statute differently from the way that the federal court did it.  And so that can really happen anywhere.  It can certainly happen, and has happened, in the labor law context with some frequency.  I've seen it with regard to, kind of OSHA type regulations.  Where else have I seen it recently?


Robert T. Carney:  Well, Brand X, itself, was an FCC case, right?


Mark Chenoweth:  Good point.  Yeah.  Brand X is not talked about very much.  And let me just speak to that briefly to say that, I think you're right, Eli.  I don't think it has been talked about very much.  And that's one of the reasons why the New Civil Liberties Alliance was excited to take on this case and to help the Baldwin seek certiorari at the U.S. Supreme Court, because we all know that any effort to seek certiorari faces uphill odds.  We thought that the injustice here was the kind that, first of all might get the Court's attention, but should get the Court's attention.  But also, even if cert isn't granted, I think that this case will have done a lot of good work in bringing more attention to the problem that Brand X has created. 


Robert T. Carney:  And as further to your point, I view it like as a ticking time bomb because as I mentioned in my earlier discussion of Home Concrete, the government actually had the nerve to promulgate a temporary reg, that is without notice and hearing as far as I know, only done under the Internal Revenue Code, where they claim to have authority, and did it while a case was in appeal, Home Concrete, and said it could apply to the case, even as long as it was still pending even though it was promulgated after the so-called six-year statute they were advocating had expired.  So that is such an extreme use of Brand X.  Obviously, they lost.  I just refer to it as a ticking time bomb. 


Mark Chenoweth:  And obviously, not every litigant who suffers from Brand X at the court of appeals has the wherewithal to be able to take a case up to the Supreme Court either. 


Wesley Hodges:  Next caller, you're up.


Steve Johnson:  Hi.  This is Steve Johnson from Florida State University College of Law in Tallahassee.  Thank you for your work on this case.  I certainly hope the Supreme Court accepts cert.  Even if it doesn’t, as you say, publicizing the issue is important.  I'm all for you.  I think your position is right. 


      With respect to the argument that if the Supreme Court doesn't feel itself bound by Brand X, witness Home Concrete, therefore, why should there be a difference at the lower federal courts?  I think, in support of that, one could invoke Article III Section 1 of the Constitution.  The first sentence of which says, the judicial power of the United States is vested in the Supreme Court, and in such inferior tribunals as Congress creates.  So, the judicial power is what's at stake here.  And the judicial power is not vested exclusively in the Supreme Court. 


      The point about Home Concrete, though, would be stronger in my estimation if Home Concrete had had a majority opinion.  It was a plurality opinion.  Moreover, on Golsen, just one small note of concern.  Golsen should not be viewed as an absolute rule.  The tax court has found exceptions to Golsen.  For example, if the precedent of a circuit court, if there's some reason to believe that precedent has been eroded over time, then the court has, in various cases, set aside Golsen.  So it's not absolute.  But nonetheless, full speed ahead and good luck.


Robert T. Carney:  Well thank, and again, I agree with you.  They try to apply the rule of what the circuit is, but that can obviously be litigated as to what the rule of the circuit is. 


Mark Chenoweth:  And the other thing I might mention.  Obviously, you're right about Home Concrete not being a majority, and this harkens maybe back to Eli's question, as well.  In terms about whether folks are talking about Brand X or not, there is a growing number of lower court judges who have been criticizing Brand X.  I mean, obviously, Judge Gorsuch, when he was on the Tenth Circuit, had done so most famously in the Gutierrez-Brizuela case.  But there have been an increasing number of judges, even just in the last two or three years, who have taken Brand X to task, including several judges in the Sixth Circuit.  And so I think there is a growing recognition among those who maybe see this happening all the time, that it is a problem, or a ticking time bomb, as Bob said.  All the better for the Court to diffuse it now.


Wesley Hodges:  Here is our next caller.


Dave Baker:  Mark, Dave Baker in Atlanta.  Excellent presentation.  Bob, thank you also, very much.  So I was counsel for Earthlink years ago, and we were actually respondents in the Brand X case.  So I'll say, I've been waiting the better part of 15 years now for this case to be overturned.  I’ve been patient I did have a chance to speak with Justice Scalia once, years post-decision, and told him, we lost the decision, but we won the dissent.  But I would recommend to everyone, Justice Scalia's dissent in the case, where he points out, it's sort of baked in, the whole point being it's sort of baked in, that Congress has already seated to regulatory agencies the interpretive power of the statute, you know, forever.  People love to talk about 2,000-page bills in Congress.  Well, that can generate 20,000 pages of regulations, sometimes.


Mark Chenoweth:  This may be cold comfort to you, Dave, but as I'm sure you're aware, Justice Thomas has also repudiated Brand X, so you now have one current dissent and the majority authors. 


Dave Baker:  Right, exactly, thank you.  But I would recommend Justice Scalia's dissent in Brand X, because as he points out, and I think it still holds up all these years later, that it's not just a question of the Supreme Court deciding administrative agency versus a circuit court decision, but in fact it says, this decision empowers the agency to ignore even what the Supreme Court says.  And the other aspect, although it's not really as explicit, but it's also kind of just there in the water, is the fact that, with this whole ambiguity, and I know that that predates the magic words, but the whole idea of ambiguity, quite frankly, the less clear the agency is, the issue in their rulemaking or decision, the more power they grant to themselves to stand up to any judicial review.  And so then, you have a situation where there's no place to turn and they become their own judge of their own decision.  So at any rate, thank you again.


Robert T. Carney:  The point was made, I will interject, that point was made very well, I believe in the Kisor case, that it encourages agencies to write ambiguously so they can, then, just use their own interpretation.


Wesley Hodges:  Thank you.  So I do want to throw the mic right back to Mark and Bob to see if they have any closing remarks before we wrap up today.  Mark?


Mark Chenoweth:  Yeah, I do have one final thought, and I didn't get into this.  But, since this is The Federalist Society, I probably should mention that Brand X creates federalism problems by, essentially empowering federal agencies to overturn state law, as well.  And rather than take credit for this argument, I would point people to the amicus brief submitted by the Goldwater Institute in the Baldwin case, which does a phenomenal job of explaining this issue, anyone who's interested in looking at that further should check that out. 


      Folks should also feel free to visit the New Civil Liberties Alliance website.  We have a case page up on the Baldwin case, where we have all of the briefings and some of the media articles and press releases and so forth, that have been issued.  So if you have a particular interest in this case, going forward, that would be a good place for you to check out.


Wesley Hodges:  Thank you Mark.  And Bob, our fearless moderator today, do you have any closing thoughts for us before we wrap up?


Robert T. Carney:  All I could add is that this is an area of intense interest in the area. I practice in primarily tax, but as Mark pointed out correctly, it cuts across the board of all federal regulatory issues.  And I know, in the class I teach, I spend one entire class on -- just on deference and Brand X and Chevron.  So this has been an exciting opportunity for me, and I hope people have enjoyed it.


Wesley Hodges:  Well, thank you so much.  And on behalf of The Federalist Society, I'd like to thank both of you for the benefit of your valuable time and expertise today.  We welcome all listener feedback by email at  Thank you all for joining us for the call today.  This call is now adjourned.        


Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at



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